According to seasonally adjusted numbers from the Icelandic Labour Force Survey, 12,400 individuals were unemployed in December 2020, or 6.0% of the labour force. The seasonally adjusted activity rate was 79.7% and the seasonally adjusted employment rate 75.6%. Comparison with November 2020 shows that the seasonally adjusted employment rate has increased by 1.8 percentage points between months and the seasonally adjusted unemployment rate decreased by 1.3 percentage points. Over the last 6 months, the trend of the seasonally adjusted employment rate has decreased by 1.5 percentage points and the trend of the unemployment rate increased by 0.5 percentage points.

Based on unadjusted measures, the number of 16-74 year olds active on the labour market was estimated to be 207,700 (±6,200) in December 2020, which is equivalent to an acitivity rate of 79.3% (±2.4). Of active individuals, the number of employed persons was estimated to be 196,200 (±5,400) and 11,400 (±3,100) unemployed and looking for a job. The rate of employed individuals of the population was estimated to be 74.9% (±2.7) and the unemployment rate 5.5% (±1.5). Comparison with December 2020 shows that the employment rate has decreased by 2.4 percentage points between years and the unemployment rate increased by 2.3 percentage points. It is estimated that 54,100 (±6,000) individuals were inactive in December 2020 or 20.7% of the labour force, which is an increase by 0.4 percentage points between years. The average hours worked in December 2020 were 35.3 hours per week which is the second lowest measure on average hours worked from the beginning of the labour force survey. The average hours worked were fewer in April 2020 when they were 34.2 hours per week.

Considerable labour market slack was seen in December 2020 when results showed that around 31,800 individuals had an unmet need for employment, which is equivalent to 14.7% of the labour force and potential labour force. Of those, 36.2% were unemployed, 26.8% ready to work but not looking, 1.8% looking but not ready to work and 35.5% employed but wanted to work more. Comparison with December 2019 shows an increase in the labour market slack by 4.8 percentage points between years. All numbers are weighted by age and gender and rounded to the nearest hundred.

Table 1. Labour market in December — unadjusted measures
  2018 (±95%) 2019 (±95%) 2020 (±95%)
Total 16–74 years
Activity rate 79.6 2.5 79.8 2.7 79.3 2.4
Employment rate 78.5 2.7 77.3 2.9 74.9 2.7
Labour market slack 6.5 1.8 9.9 2.3 14.7 2.4
Unemployment rate 1.4 0.7 3.2 1.2 5.5 1.5
Hours of work 36.2 1.3 37.6 1.4 35.3 1.2
Labour force 201,600 6,300 207,200 6,900 207,700 6,200
Employed 198,800 5,400 200,700 5,800 196,200 5,400
Unmet need for employment 13,300 3,700 21,300 4,900 31,800 5,100
Unemployed 2,800 1,400 6,700 2,400 11,400 3,100
Inactive 51,700 5,800 52,600 6,100 54,100 6,000
Est. population 253,300 259,700 261,800
Table 2. Labour market last 6 months seasonal adjustment
Total 1674 years
Activity rate80.780.679.380.179.479.7
Employment rate75.775.475.974.573.875.6
Labour market slack13.814.613.215.415.914.5
Unemployment rate5.
Hours of work37.837.838.138.338.238.0
Labour force210,600210,300208,300210,600206,400208,000
Unmet need for employme29,90031,80028,80033,80034,30031,500
Est. population261,000261,000262,600263,000259,800260,900
Table 3. Labour market last 6 months seasonal adjustment trend
Total 1674 years
Activity rate79.980.0 80.0 79.9 79.7 79.7
Employment rate76.376.2 75.8 75.3 75.0 74.8
Labour market slack13.113.5 13.9 14.3 14.5 14.7
Unemployment rate5.15.2 5.4 5.5 5.6 5.6
Hours of work37.737.8 37.9 37.9 37.9 37.9
Labour force209,000209,300 209,300 208,900 208,600 208,700
Employed199,600199,300 198,300 197,100 196,200 195,900
Unmet need for employm28,30029,300 30,200 31,000 31,500 31,800
Unemployed10,70010,900 11,200 11,400 11,600 11,700
Inactive52,40052,300 52,500 52,600 52,600 52,500
Est. population261,500261,500 261,600 261,600 261,600 261,800

About the data
The Labour Force Survey for December 2020 covers five weeks, from November 30th 2020 through January 3rd 2021. The sample consisted of 1,899 individuals, 16-74 years old and domiciled in Iceland. When those who were domiciled abroad or deceased had been excluded, the net sample consisted of 1,863 individuals. Usable answers were obtained from 1,196 individuals which corresponds to a 64.2% response rate.

New framework regulation for the production of European Social Statistics
It should be pointed out to users that on 1 January 2021 a new framework regulation establishing a common framework for European statistics relating to persons and households, based on data at individual level collected from samples, took effect. The regulation will influence the harmonised European sample surveys conducted at Statistics Iceland, within the Social Statistics. Henceforth, the questionnaire of the Labour Force Survey has been adapted to the regulation and put into use in the beginning of January 2021. The main changes included in the legislation as regards the Labour Force Survey are 1) a new module regarding labour market status, 2) changes to working time measurement, 3) new questions, 4) changes to the survey’s target population and 5) changes to weights and population estimates.

The new module regarding labour market status includes more detailed instructions on the submission of questions regarding labour market status with the aim of increasing the harmonisation of the Labour Force Surveys across Europe. Statistics Iceland has estimated minor effects of these changes on the measurement of labour market status in Iceland. Changes of working time measures are an attempt to better estimate absence from work in the reference week. It is likely that those changes will have an effect on the time-series such that the average working hours will decrease and thus lead to a break in the time-series. This is a problem shared by most European countries. New measures that have been added to the questionnaire will allow for more diverse breakdown. These are for example questions about health status, questions relating to obstacles in daily life and questions about job satisfaction.

Changes in the target population include a higher upper age limit, from 74 years to 89 years, giving the new target population as individuals aged 16-89 years. As before, results for 16-74 year olds will still be published aside results for the older group. New weights will be introduced correcting for the dropout rates of individuals with foreign citizenship. Furthermore, changes in population estimates will be made to reduce fluctuations and ensure stability in the estimated population of the Labour Force Survey. The news release and figures for the labour market in January 2021, scheduled on 25 February, will be the first publication based on the new format of the Labour Force Survey.